FinServices sector left reeling in wake of high-profile arrests on money laundering charges

Malta’s business community is in turmoil over revelations in the assassination of Daphne Caruana Galizia and other high-profile money laundering cases

Nexia BT partners Brian Tonna (centre) and Karl Cini (right) being transported to Court by police
Nexia BT partners Brian Tonna (centre) and Karl Cini (right) being transported to Court by police

Malta’s business community is in turmoil following recent damning developments in the investigation of Daphne Caruana Galizia's assassination, the outgoing president of the Malta Chamber of Commerce said.

David Xuereb told sister newspaper BusinessToday this morning that the arrest and incarceration of a number of prominent individuals - including the former chief of staff of the country’s former prime minister, as well as a number of financial advisors, accountants and businessmen - on charges of money laundering, corruption and fraud, had Maltese businesses worried about what was yet to come. 

“Most worrying is that these developments, and what is surely yet to come, will have a crippling effect on Maltese businesses and their hopes of investing, joining partnerships and enticing foreign businesses to join local endeavours,” he said.

Xuereb said the money laundering charges were particularly damning as Malta had for years worked hard to portray itself as a safe and forward-looking financial services centre of excellence.

“We are seeing this onslaught of scandals, revelations and legal proceedings because for many years, hardly any action was taken to follow up on reports and accusations,” he said. “My hope is that whatever else is to come, comes quickly.”

The compilation of evidence against Nexia BT partners Brian Tonna, Karl Cini and Manuel Castagna, and the company's financial controller, started today. Proceedings against others, including Keith Schembri, are expected to start tomorrow.

Xuereb said that it was imperative that any necessary action is taken immediately and that all crimes, infringements and conspiracies are uncovered and solved and that any and all guilty parties are identified and punished.

However, once all legal and judicial processes are concluded, it is equally important that the country be in a position to move on.

Xuereb said that Malta’s reputation was nowadays in tatters.

“Our country and our businesses have lost their ability to develop lasting commercial relationships because foreign investors are now wary of us,” he said.

He said the ever-present spectre of the upcoming Moneyval report on Malta was further undermining Malta’s chances of an imminent and swift return to international recognition.

“That is why it is inevitable that these current developments will cause Malta’s reputation to suffer further under international scrutiny,” he said.

Anti-money laundering

Possibly the most damning and harmful of recent revelations involves the money laundering charges levied against a number of individuals and companies.

BusinessToday reports that the local financial services sector has been left reeling by the recent revelations.

Banks, auditing firms and financial services advisory firms are worried that the recent developments will lead to further controls and increased scrutiny on their AML standards and regulations.

Sources said that many operators are now questioning if existing know-your-client (KYC) standards are enough to shield them from future scrutiny. “The feel-good factor that was so touted and flaunted some years ago is definitely gone,” one source said.

The sources said that businesses and investors had suddenly become wary of doing business with others, afraid of what baggage the other party might bring to the table.

“We have now seen the authorities freezing all assets of all people somehow linked to a person under investigation,” one source said. “No everyone is wary of bringing in others, not knowing if they could bring them down too, were they to end in trouble down the line.”

Another source said that the effects of the recent developments on Malta’s financial services and commercial sectors would be felt for years.

“Those who can read between the lines know that this is not a good place for Malta to be,” they said.